5 tips for a new age of commerce from Uniqlo CEO

Fast Retailing CEO, president and founder Tadashi Yanai, one of Japan’s and global retail’s leading retail figures, made a rare public appearance on Tuesday as part of Panasonic’s 100th anniversary celebrations in Tokyo.

Yanai, whose business has recently usurped Gap to become the world’s third largest fast fashion operator behind Zara owner Inditex and Sweden-based H&M, spoke in depth about the need for organisations to think big and disrupt themselves. It was in keeping with the wider theme of the forum which saw the electronics company place a focus on changing its ways to successfully navigate another century of business.

Essential Retail was in the audience at Tokyo International Forum venue to hear the retail executive speak, and we’ve picked out five key points he made on what makes a successful business model and how the world of commerce is evolving.

1. Irrational thinking

Yanai, whose business opened its first Uniqlo store in Japan in 1984 but now operates 827 outlets in its home country and 1,241 additional shops internationally, called on companies to think big if they are to succeed long into the future.

“The most important thing is to have high aims and unthinkably high goals – so high that people think you are crazy,” he explained in an hour-long keynote speech.

“Set high aspirations – that is the source of innovation."

Over the two-day conference in the heart of Tokyo, a key theme revolved around the need for Japanese businesses to change mentality to remain competitive in a new era of commerce no longer defined by traditional rules. Panasonic senior execs themselves spoke openly of their organisation’s requirement to change tact in order to thrive as it enters into a second century.

Uniqlo’s Yanai took the opportunity to say what Panasonic could be, and his suggestions were perhaps surprising. Instead of developing car batteries, he advised the company’s workforce: “Panasonic should provide the car itself, cars that are different, that will transform the lives of people – that’s the type of car you need to aim for.

“How about a ‘life-car’ made for all – highly functional, great designs, and affordable for everyone in the world? That is the democratisation of the car.”

2. Democracy of product

Yanai also encouraged greater ventures for Panasonic in manufacturing residential homes, and his point was no-one knows what the future is going to look like, so it is up to companies to develop innovative ideas that help shape the world and aid society in the process. Even if it means moving away from their comfort zone.

For the Fast Retailing CEO, it fits with his notion that Uniqlo has brought clothing democracy to the world. Whereas clothing can represent hierarchy, for example military uniforms, neck ties, and suits, Yanai said: “We provide quality clothes for everybody and have created the concept of ‘lifewear’.

“We are seeking to achieve democracy for apparel, similar to what Panasonic founder Konosuke Matsushita spoke about with his ‘tap water’ philosophy – the ideology is very similar.”

3. ‘Tap water’ philosophy

Yanai was very complimentary of Matsushita, who he said was a major influence in how the Fast Retailing enterprise was fashioned thanks, in part, to his books on corporate management published in the 1970s.

The idea of ‘tap water’ philosophy, meaning it is the mission of a manufacturer to overcome poverty and create happiness by producing an abundant supply of goods as plentiful as tap water, was a foundation of the Panasonic business model.

It is a theory that Yanai bought into early in his career, and he used the conference to say: “We should be doing business to enrich everyone’s lives and that’s been our mission since day one.”

4. Have a mission

Much of the above exemplifies Fast Retailing’s mission, the seeds of which were created in the 1970s following Yanai’s graduation and his early career with the family business, but which ultimately came to fruition in 1984 when Uniqlo started its journey.

Another mission was to topple Gap in the fast fashion ranks, and according to recent annual sales figures that has now been achieved by Fast Retailing. “We always said we would exceed Gap, we said we would be the world’s number one retailer beyond Gap – that was the first target we set at the beginning,” he noted.

“People said I’m probably crazy. I set extremely high goals. Because of that our company has been able to create many innovations.”

5. Change yourselves

He acknowledged that Fast Retailing is looking to change itself by focusing on better connecting its Japanese head office to other global companies, and ensuring that it becomes less hierarchical in structure and more digital in its proposition and partnership strategy.

Other companies, in particular those Japanese businesses that have operated in similar ways for years, need to refresh themselves on their raison d’etre and make some bold decisions about how that fundamental organisational mission is evolving, he said.

“You have to change everything you do in order to achieve a high goal. It’s the role of individuals to recognise that.”